BEIJING, August 12 (TMTPOST) – Dingdong (Cayman) Limited (Dingdong), a leading fresh grocery e-commerce company in China, made its positive net income for the first time due to the Shanghai lockdown, according to its second quarter financial report released on Thursday.
Dingdong revenues grew 42.8% year-over-year to $6.634 billion for the quarter. The company reported a net loss of $34.5 million, which was only 1.8% of the total loss in the same period last year.
After deducting equity incentive expenses, Dingdong achieved a non-GAAP (Generally Accepted Accounting Principles) net profit of $20.6 million, compared to a net loss of $1.729 billion in the same period of the previous year.
In the conference call, Liang Changlin, the founder and Chief Executive Officer of Dingdong, said that the spreading of coronavirus impacted the earnings in the second quarter. Revenue was expected to grow in the third quarter. The company is confident of achieving profitability in a single month on a non-GAAP basis by the year-end.
During the March-May lockdown in Shanghai, where Dingdong is headquartered and has its most mature market, Dingdong provided food products as one of the key designated supply companies for residents.
"In the first half of 2022, Dingdong achieved profitability in the Yangtze River Delta region with an operating margin of 3.7%, which is expected to be replicated in other regions." Liang said.
The new distributed mini warehouse model, represented by Dingdong, has experienced long-term loss due to high contract-fulfillment costs and traffic acquisition expenses. In the first quarter of 2022, Dingdong"s net loss margin improved from 32% in 2021 to 8.8%, with a non-GAAP net loss margin of 7.8%.
During the conference call, Liang also said that the quality of a business model is determined by whether it can meet customers' needs and keep up with the trend. Given that the distributed mini warehouse has the highest efficiency, the fastest delivery speed, and meets the different needs of the younger generation, it deserves to be adopted.
Dingdong has continued to reduce its net loss margin for 10 consecutive months, boosting its low gross margin by improving its supply chain to increase gross margin and tackle the problem of high loss of fresh products.
Its loss is now much lower than that of the traditional fresh food business. Liang emphasized that Dingdong will continue to focus on fresh food and food-related products in the future to expand its distributed mini-warehouse business.